Mutual Funds–Basics

Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

Balanced Fund

The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.

Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.

Gilt Fund

These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes.

Index Funds

Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme.

There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges.

What are sector specific funds/schemes?

These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

What are Tax Saving Schemes?

These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme.

Leading a team and wooing a girl.

There are a lot of similarities between wooing a girl and leading a team

• First Impression

Human mind, however trained it might be, has certain built in prejudices. Mind tend to judge people based on there appearance and behaviour. Once an impression is formed it is very difficult to change it. Thus first impression matter a lot.

When you are introduced to your team for the first time be conscious about the image you want to project. Be it meticulous or casual. Dress appropriately for the occasion. It is same with a girl; be prepared the first time you meet her. Attire and attitude will never fail to give you that fist boost.

 

• 
  

  Grab attention

• To be accepted as a leader you have to prove yourself. You need to show your team that you are good in at least one area. By this you will gain their respect and will have the teams attention when you are speaking.
• When you want to woo a girl, you need to have some moves to impress the lady. Be it your moves or your vocabulary.
• 

• Keep motivated 

• Perks can be a great way of motivating your team. Learn to celebrate minor and major victories together. This will also allow the team get closer to at a personal level.
• Flowers work great with women. So does small keepsakes which have no practical value other than add clutter to your cupboard.
• 
• Extract Performance
• Create an insatiable desire in the team to impress you. The insecurity of the team will drive it to outperform itself every time its given a task. Always tell them that you have high hopes about them and set harder targets.
• 
• And remember
• There is no happily ever after….

Indian Nuclear Programme

The unfortunate events in Fukushima Dai-Chi nuclear power plants put forth several pertinent questions for Indian nuclear program

1. Is Nuclear energy still a viable option?
2. What are the safety features of the plants?
3. Methods of auditing the safety practices.
4. Action plan in case of a similar disaster.

 

Nuclear energy was widely adopted by Japan due to absence of any other natural resources. India with its burgeoning population and limited natural resources is placed in a similar predicament. Hence the use of nuclear technology for production of energy is unavoidable. But research into other options must continue.

Modern nuclear plants incorporate multiple redundancies to contain a catastrophe. The plant in Fukushima had 3 levels of backup. But apparently all the three of them failed on occurrence of an unprecedented catastrophe. This situation should prompt our domestic nuclear programme to examine our on safety features and back ups. These must be benchmarked against the worst case scenarios like tsunami or an asteroid impact. All assumptions should be challenged and questioned. The reports on safety must be made available in public domain for scrutiny.

Independent and internal audits should be in place for reviewing the safety features of the plant. Apart from internal audit of DAE, audit from foreign agencies and certifying agencies must be sought and guidelines must be strictly adhered to.

For domestic nuclear programmes use of domestic technologies must be encouraged. This will lead to clearer understanding of the operators regarding the plant.

Finally each plant should have an emergency protocol in place. The action to be taken in the worst case scenario should be well defined and well communication. Emergency drills must be conducted scrupulously.

The fukushima nuclear incident has opened up the much needed dialogue on safety aspects of nuclear power plants. Government should take up this opportunity to educate the public about the preparedness of our nuclear programs and risks involved.

Higher Education for rural women

Education in its quintessential sense involves multi dimensional development of a human being. It enables a person to aggregate information,  evolve his/her own understanding of the data and act based on the understanding in his best interest. Education empowers to make informed decisions and wise choices. Thus an educated citizenry is an essential requirement for a successful democracy.

Education of rural women is very essential for the progress of a nation. Women constitute roughly half of the Indian population. They are the ones who make basic domestic choices. Women also have a major role in bringing up the children in the family too. Thus women not only have the potential to play a pivotal role in grassroots politics but has an important responsibility of shaping the future citizens.

Educated women can play a major role in Panchayati Raj system. With 33% reservation in place, our villages are in need of women who can lead their localities to a better future. By increasing the literacy rate of rural women, we will be able to elect our representatives from a larger qualified pool. This in turn will tap into, now latent, leaders among women. Increased female representation will help direct more of governance effort to the aspirations of women and in turn will lead to more empowerment.  Education and involvement in governance will have a positive avalanche effect on the fate of rural women.

Higher ratio of qualified women in a society has been directly linked to lower infant mortality rates and hence better economic growth. For example Kerala with its 86% female literacy boasts of the lowest infant mortality rate. Educated mothers can take informed decisions on vaccination, nutrition, pregnancy care and birth control. Thus education of rural women will certain produce a better generation of citizens. Moreover an educated mother will certainly encourage her children to achieve greater heights.

Education and empowerment of rural women can certainly improve the standard of living for the rural poor. This will also help in better governance, economic prosperity and a brighter future  for the country.

Ethics and Downloading movies.

There is raging debate on the legality of sharing copy righted content through various means such as p2p, torrents etc. I feel that sharing copyrighted content is illegal and unethical. But this issue is not entirely black and white to be labelled illegal and ignored. Music and movie industry allegedly loose millions of dollars due to illegal downloads. So this issue needs a more closer look.

Financial Loss aspect

In a free market economy, innovation cuts out any flab in the existing system and makes processes efficient, cheaper and accessible for masses. Torrents and file sharing are new innovations which are here to level out the playing fields. These technologies if used properly can act as cheap distribution tool in place of defunct systems. It can cut out middle layers which greatly increase the cost of a movie and connect production houses directly to the customer. Imagine a business model in which a major production house hosts movies on its server for torrent download. And assume that customers just need to pay 10 rupees to download a legitimate copy of the movie. The economics of scale may pay the cost of the movie. The system would work better if the movie downloaded has commercial breaks. So instead of just selling DVDs or BluRays, movie houses should look into the possibility of a torrent release.

This would also eliminate the probability that  no old movie will be unavailable. As the demand for a movie(dvd) decreases it would become uneconomical to release dvds for a micro community. Hosting it as torrents means a continued revenue stream from old movies too.

Another aspect of legitimate torrents would be reaching out to huge global population of millions. Movies can reach areas where there are no cinema halls. And looking at evolving rural connectivity Africa and Asia are huge potential markets.

Ideas from Prahlads – Fortune at the bottom of the pyramid can be used effectively here.

Ethical Aspect

I don’t personally feel that it is unethical download ‘out of print’ movies. Say I want to watch “The Maltese Falcon”. I don’t think it is available as a single disc here. Cost of shipping it from abroad will be unfairly huge. I am also not sure about the status of copyright for such an old movie. If there was a legit source with fair price i would have obliged.But unfortunately that is not the case.

Market Force

Downloading a movie from the cloud is not exactly free of cost. There is the capital cost of owning a computer, recurring cost of a broadband connection and operational cost of the electricity consumed. If productions houses can price DVDs competitively then torrents will be less popular.

The cost of production can drastically come down if efficient modern technologies are put to use. The remuneration of the stars may also take a hit. They may come down in proportion to the value they add to the society.

Thus torrents may act as the balancing market force. And make ‘to be entertained’, universally affordable.

So production houses, rather than bullying the new kid on the street, should look for ways to work with him for a better future.

On writing prose–Orwell

Before writing a sentence, ask these questions to yourself -

1. What am I trying to say?
2. What words will express it?
3. What image or idiom will make it clearer?
4. Is this image fresh enough to have an effect?
5. Could I put it more shortly?
6. Have I said anything that is avoidably ugly?

General rules

1. Never use a metaphor, simile, or other figure of speech which you are used to seeing in print.
2. Never use a long word where a short one will do.
3. If it is possible to cut a word out, always cut it out.
4. Never use the passive where you can use the active.
5. Never use a foreign phrase, a scientific word, or a jargon word if you can think of an everyday English equivalent.
6. Break any of these rules sooner than say anything outright barbarous.

as seen on a sooty wall.

I once had a fecund orchard,

Mangoes, mulberries and cherry.

Those days i was a dandy bard,

Sat in bower; sang in merry.

In the spring bloomed many

Rose and lis; angelic as any.

 

A day, i was away, a  fire charred it all

Burned it from bush to bough

Scorched and singed the stone wall

Nothing was left green to  grow.

I now wait for summer rain

For my orchard to be whole again.

staying in pain.

You have left a gaping hole

No more will i be whole

Trying to fill it with whateva i can lay my hands on

Whiskey and soda ; pretty useless

The poison in my veins.

blinding me and leaving me comatose.

i can’t forget the pain

all the promises made in vain

left u for the sake of love

i cannot take this any more

Trapped in a bottle

I am undergoing a social experiment. I am the subject and i am the scientist. How would u go on a picnic with a set of total strangers who babbles away in an alien language? Difficult isn’t it? I feel like i am going through my adolescence all again. Trying to fit in. Trying to be a part. Trying it somewhere you actually don’t belong.

What would you do when you are stuck in such a place. Apart from wishing you were not there. One thing i tried doing after gulping down the large was watching people. watching how people from different socio- economic status and educational backgrounds try to fit in. I felt i was not the only one who was feeling alien and hence trying to fit in. Every single person there was trying to fit in.trying to be a part of the crowd. As if standing alone will make them vulnerable. Standing alone will expose their soft under belly and all the flab that has accumulated there. 

Do all of man kind really fear being different. Is that why there are these many social decorum to be followed?  And is that why we try to fit in? Even though unsuccessfully.

360ml of Antiquity

Things might be right after the night

But the pain is denying me even sleep

Each passing moment hurts;

no analgesic, no anodyne.

She has cut off my eyelids.

But I see nothing but darkness!

Excrement of Karma filled my brain.

In the vomit i am lying;

I see my personal purgatory.